Three beautiful consequences of Trump’s tariff game

During his election campaign last year, Donald J. Trump was unequivocal in expressing his love for tariffs: in an election rally, he declared, “I always say that ‘tariffs’ is the most beautiful word to me in the dictionary”. That the new administration was serious about using tariffs to address a range of perceived and real ills was clear as early as 20^th January 2025 with the release of the Presidential Memorandum on “America First Trade Policy.” Rapid fire moves have followed since then, with tariffs being slapped on friends and foes, bracketed with exemptions, escalated, selectively paused, and more. Target states have responded to the roller-coaster ride in different ways: some with recriminations and retaliations, others with stoic disapproval but no counter-measures, and some with pre-emptive tariff cuts and positive negotiation offers.

The scale and on-and-off nature of the tariffs have injected a new level of uncertainty into the global economy — this in itself generates costs.

Commentary in Western media outlets, think tanks and research institutions has tended towards a mix of outrage and ridicule. Some describe Trump’s tariffs as an “own goal” for the US, while others decry their adverse impact on poorer countries. Not all criticism coming from an outspoken global elite is wrong. For instance, regardless of the framing, there is little “reciprocal” about the levies. There will almost certainly be increased costs for American consumers and producers in the short run; whether the administration will be able to counter these costs in the medium run remains to be seen. The scale and on-and-off nature of the tariffs have injected a new level of uncertainty into the global economy — this in itself generates costs. But amidst the general denunciation and hand-wringing, some important considerations are being missed.

There are three beautiful and (mostly) unintended consequences of the Trump’s tariff game, which deserve to be harnessed. First, Trump’s actions provide a perfect context for ardent free-traders to liberalise their respective economies. Unilateral reduction of tariffs used to be the mantra of neoliberal economists — a silver bullet to address almost all that ailed the world, especially the developing world. Trump’s tariffs have now handed not just the hyper-globalists, but also circumspect governments with a pro-liberalisation bent, an opportunity: They can free themselves of the vested interests that had stymied the processes of economic reform. A few governments, including the Indian one, are accordingly using the challenge posed by Trump to lower some of their own tariffs; several countries in the West would do well to learn from these examples.

Trump’s actions provide a perfect context for ardent free-traders to liberalise their respective economies.

Second, amidst the global economic slowdown that is expected from the trade wars, we have an unprecedented opportunity to adapt our preferences and lifestyles towards sustainability and planetary welfare. India led the way on this by advancing the concept of LiFE (Lifestyle for the Environment) as part of its G20 Presidency; even a small decline in trade now could go a long way to encourage countries and peoples to embrace and implement choices – of production and consumption – that align with the concept of a circular economy. Some decrease in global trade and reordered consumer preferences, if mindfully managed, could end up promoting a kinder and safer model of globalisation. For instance, if lesser trade can result in a decline in/ ban on the export and import of live animals (who transported in horrifying conditions, only to be slaughtered after traumatising long journeys) and restrictions on live markets, then that may be no bad thing for the more-than-humans with whom we share this planet as well as pandemic prevention.

Third, while many mourn the decline of the old rules-based multilateral trading system – a decline that Trump 2.0 is only accelerating – a reboot of the system has been long overdue. Member countries were (just about) muddling through the maze of international organizations with agendas that are either still rooted in the post- World War II order that was set up by the US and the Europeans, or new creations led by authoritarian China with its own, alternative view of global order. The trade war between the US and China can provide the necessary push for third parties to stop relying on systems of global governance that no longer serve their purpose, and either fundamentally update the World Trade Organization or build new institutions with like-minded democracies (which recognize that sometimes, trade-offs will have to be made between national security and prosperity, and allow states to enact necessary measures that their electorates support). In other words, Trump’s wrecking ball could inadvertently trigger the making of a new system of global economic governance that is savvier on balancing different national priorities, and also more accountable to people on the ground.

Trump’s wrecking ball could inadvertently trigger the making of a new system of global economic governance that is savvier in balancing different national priorities, and also more accountable to people on the ground.

To be clear, credit for the positive aspects highlighted here cannot and should not go to the “drill, baby, drill” President of the US. They are possible and unintended consequences of his policies, which could work to the advantage of people and the planet, depending on how we react. This is not a time for complacency; without concrete action coming from the world’s democracies, China is likely to step into the vacuum that the US exit from global governance is creating. To ensure that some of these positive developments transpire, responsible governments and other actors will have to be proactive in building new alliances with like-minded partners, and trade deals that respect animal welfare and animal rights.

Amidst all the fuss surrounding Trump’s tariffs and counter-measures, it is too easy to forget an important and empowering idea — tariffs, ultimately, are what we make of them.

This commentary originally appeared in Indian Express.

• International Trade and Investment
• China
• USA and Canada
• America First Trade Policy
• America First Trade Policy
• animal welfare
• circular economy
• economic reform
• global economy
• global governance
• LiFE initiative
• national security
• new trade alliances
• pandemic prevention
• sustainability
• tariff liberalisation
• tariff liberalisation
• trade wars
• Trump tariffs
• US-China trade war
• World Trade Organisation

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